One of the most popular cryptocurrencies on the market, Bitcoin is reaching all-time highs on Asian trading platforms, despite recent challenges. The virtual currency has been rising in value, by 140 percent in 2016 and by roughly 50 percent in the past month alone, trading at over $1,800 on the Chinese market last week (http://dtn.fm/px7Ki). The value has dropped to around $1,700 in the meantime, but the cryptocurrency is expected to continue its growth, even if China is enforcing a series of Bitcoin trading regulations and Japan is considering the same.
One of the biggest challenges the digital currency is facing has to do with getting approval to be tied to an exchange-traded fund in the United States. Earlier this year, the U.S. Securities and Exchange Commission rejected a proposal to create a Bitcoin ETF on account of the lack of clear regulations on the markets where the cryptocurrency is traded (http://dtn.fm/EV7a8). The SEC said the lack of clear regulation on these markets raises concerns about potential manipulative or fraudulent practices in this market.
The application had been submitted by brothers Tyler and Cameron Winklevoss, who have been working on a proposed Bitcoin ETF for four years and have already won New York authorities’ regulatory approval for their virtual currency trading platform, Gemini Exchange. Other companies have also submitted approval request for Bitcoin ETFs to the SEC, and the commission may reach a different decision on those proposals, but approval is unlikely in the near future until more mature markets emerge.
Supporters of the digital currency had hoped that an ETF would help bring Bitcoin into the mainstream and make it available to retail investors via brokerage firms. The regulatory questions surrounding the currency have already deterred many financial institutions from investing significantly into Bitcoin, opting instead to focus on the underlying technology known as blockchain – a revolutionary concept that introduces a new way of processing financial transactions and keeping track of information.
Regulatory concerns over the cryptocurrency also exist on the Asian markets where Bitcoin is traded. China, responsible for almost 90 percent of all Bitcoin exchange trading, is imposing trading fees and controls, aimed at ensuring that bitcoin trading platforms are not becoming money laundering sites. A ban on cryptocurrency exchange withdrawals has also been enforced, and the country is also considering regulations that will require Bitcoin traders to register with their real names. The digital currency is being widely used by Chinese investors as a way of circumventing the country’s strict capital controls and minimizing the risk of significant losses caused by yuan deflation.
Japan, meanwhile, is taking rapid steps toward fully legitimizing the cryptocurrency, by announcing plans to allow interest-paying deposits for Bitcoin. The country has already declared Bitcoin a legal currency, establishing a platform for large corporations and institutional investors to participate in the local digital currency industry.
According to Sandeep Goenka, co-founder of one of India’s leading Bitcoin exchanges Zebpay, news of trading regulations on the two Asian markets and in Russia are partly what is driving the currency’s growth, Cointelegraph reports (http://dtn.fm/XO23d). Goenka believes that the stable growth rate is due to a global increase in awareness toward Bitcoin, as well as a growing demand from institutional investors. Instead of having a dampening effect, trading regulations will only help bring the cryptocurrency into the mainstream, says the Zebpay co-founder. In his opinion, the price of Bitcoin could reach $3,500 by the end of the year.